stories filed under: "cramming"

AT&T Fined For Turning A Blind Eye As Drug Dealers Ripped Off Its Customers

from the telecom-free-for-all dept

Tue, Aug 9th 2016 9:36am — Karl Bode

While Comcast gets the lion's share of the public's loathing, there's an argument to be made for AT&T actually being a worse company. Think Comcast, but with slower broadband speeds, more dubious executive ethics, and an even greater disdain for its paying customers. In just the last few years AT&T has been: fined $18.6 million for helping rip off programs for the hearing impaired; fined $10.4 million for ripping off a program for low-income families; and fined $105 million for helping "crammers" by intentionally making such bogus charges more difficult to see on customer bills.

In every instance AT&T was either busy ripping off customers directly, or turning a blind eye to fraud aimed directly at AT&T customers -- because in most instances AT&T got a cut of the profits.

Fast forward to this week, when the FCC announced it would be fining AT&T another $7.7 million (pdf), this time for actively helping drug dealers rip off paying AT&T customers. According to the full FCC order (pdf), AT&T turned a blind eye to two bogus Cleveland companies, Discount Directory, Inc. (DDI) and Enhanced Telecommunications Services (ETS), which had been billing AT&T phone customers $9 per month for a "directory assistance service" that didn't actually exist. These bogus companies were originally only uncovered during a DEA drug investigation:

"In May 2015, while investigating the Companies’ principals for drug-related crimes and money laundering, the United States Drug Enforcement Administration uncovered that DDI and ETS were sham operations that never provided any directory assistance service to the customers billed by AT&T. The Companies’ principals told law enforcement that they submitted fake service charges for thousands of AT&T customers (mostly small businesses) over a multiyear period."

The complaint proceeds to suggest that AT&T was aware of these charges (as with previous cramming settlements), but turned a blind eye because it took a cut of each fraudulent charge:

"Although it bore ultimate responsibility for the charges placed on its customers’ bills, AT&T never required proof from the Companies that they obtained customer authorizations to be billed for their service and the record shows that the Companies never obtained any such customer authorizations. In addition, AT&T ignored a number of red flags that the charges were unauthorized, including thousands of charges submitted by the Companies for nonexistent, disconnected, or otherwise “unbillable” accounts."

As per the settlement, AT&T will issue $6,800,000 in refunds to all current and former consumers charged for the sham directory assistance service, and a $950,000 fine to the U.S. Treasury. AT&T's also been forced to cease billing for nearly all third-party products and services for wireline customers (now that few use wireline anyway), adopt policies requiring express informed consumer consent before such charges can be reapplied, and revise its billing systems so that such charges are easier to find.

While these fines are puny and belated, keep in mind that until the last few years regulators did little to nothing whatsoever to hold larger telecom companies accountable for their role in perpetuating that kind of fraud -- making this a step up from the apathy of decades' past. Still, AT&T consistently gets to pay settlements that are likely only a small fraction of the money collected over the years, its lawyers and accountants already busy cooking up the fraudulent efforts we'll surely get to read about in 2022.

Filed Under: cramming, drug dealers, fcc, fines, service fees
Companies: at&t

After A Ten Year Nap The Government Wakes Up On Cramming, Finally Holds Big Carriers Accountable (Sort Of)

Scams

from the better-late-than-never dept

Mon, Dec 22nd 2014 2:28pm — Karl Bode

Most people are familiar with the practice of cramming -- or suddenly waking up one day to find your wireless phone bill stocked with $10 per month services (usually horoscopes, "premium text message" or ringtones) you didn't ask for and don't want. While the government has occasionally come down hard on the small companies engaging in these scams because they're easy legal wins, it has historically left the big carriers (and campaign contributors) alone, despite the fact that AT&T, Verizon, T-Mobile and Sprint all turn a blind eye to the practice in exchange for up to 40% of the proceeds. After a deep slumber, the government has finally started taking bigger companies to task, even if it's a day late and more than a few dollars short.

Back in October, the FTC announced it had struck a $105 million settlement with AT&T, with an investigation finding that not only did AT&T turn a blind eye to crammers and the mountains of consumer complaints, it actively worked to make getting refunds more difficult. The telco also intentionally made bills more confusing so customers would have a harder time figuring out that they were being ripped off:

"The structure of AT&T’s consumer bills compounded the problem of the unauthorized charges, according to the complaint, by making it very difficult for customers to know that third-party charges were being placed on their bills. On both the first page of printed bills and the summary of bills viewed online, consumers saw only a total amount due and due date with no indication the amount included charges placed on their bill by a third party. The complaint alleges that within online and printed bills, the fees were listed as “AT&T Monthly Subscriptions,” leaving consumers to believe the charges were part of services provided by AT&T."

AT&T's not alone. Rumors indicate that Sprint is about to face similar penalties, and it seems like only a matter of time before Verizon joins the party. The FTC has also struck a settlement deal with T-Mobile that has the "uncarrier" paying $90 million in consumer refunds, $18 million in fines and penalties to the attorneys general of all 50 states, and another $5 million in fines to the FCC. Despite their recent reputation for consumer friendly behavior (the company said the FTC's allegations were "unfounded and without merit" earlier this year), T-Mobile, like AT&T, made getting refunds nearly impossible and intentionally made the charges hard to see on consumer bills:

"According to the FTC’s July complaint, T-Mobile’s phone bills made it nearly impossible for consumers to find and understand third-party subscription charges. The FTC’s complaint against T-Mobile noted that in many instances information about the third-party charges crammed on to customers’ bills was buried deep in phone bills that totaled more than 50 pages in length."

Of course if you figure out that carriers were getting 40% of $10 per month charged to tens of millions of customers for more than a decade, the fines don't even come close to the amount of money these companies made by ripping off their subscribers. Better late than never?

Filed Under: carriers, cramming, fcc
Companies: at&t, sprint, t-mobile, verizon

21 Comments

FCC Used Title II To Fine AT&T For SMS Cramming And The World Didn't End: Why Would It For Broadband?

Scams

from the questions-to-ponder dept

Tue, Oct 21st 2014 1:45pm — Mike Masnick

You may have heard the story a few weeks ago about how the FCC and FTC teamed up to fine AT&T $105 million for mobile cramming (allowing unauthorized mobile charges for premium -- costly -- SMS, of which AT&T kept 35% of all money made). As the FCC noted:

The Enforcement Bureau launched its investigation after receiving consumer complaints alleging that AT&T customers had been billed with months of unauthorized charges for third-party services that they did not request. In some cases, complaints alleged that AT&T Mobility refused to issue refunds or would only refund one or two months' worth of such charges, leaving consumers on the hook for the rest. Until January 2014, AT&T Mobility included charges for third-party services -- such as monthly subscriptions for ringtones, wallpaper, and text messages providing horoscopes, flirting tips, celebrity gossip, and other information -- on its customers' telephone bills. The charge for each of these types of subscriptions was typically $9.99 per month.

This was the largest fine the FCC has ever given out. Some, quite reasonably, pointed out that it took the FCC (and the FTC) quite a long time to catch up on this, as such practices had been called out for years and years.

However, there was a much more interesting element to this fine, as it relates to the current net neutrality "Title II" fight. Remember, the telcos (including AT&T) are pretty adamant that if broadband is classified under Title II it will be the death of all good things. It will be a huge regulatory burden and companies like AT&T are likely to cease all investment and such. Similarly, AT&T and others insist that there's enough competition in the market to prevent anti-consumer practices, and that Title II simply isn't necessary in such a "competitive" market.

So, um, what authority did the FCC use to fine AT&T this time? Well, buried in the official filing, we see that it was done under Section 201(b) of the Communications Act of 1934. You can see 47 USC 201 and read it for yourself, but it's mostly important to know that 47 USC 201 is Title II. In other words, despite an even more "competitive" mobile market than broadband, the FCC had to break out Title II regulations to protect consumers from a years-long scam in which AT&T profited massively, scamming millions from consumers.

And... notice that AT&T accepted the fine and isn't complaining about it. Nor is it challenging the use of the Title II authority, despite SMS being considered something of a service in "limbo" in which it hasn't been definitively classified under Title II or Title I.

And yet, the mobile world has not collapsed. AT&T and other mobile operators aren't screaming to the heavens about how this use of Title II will chill all investment, create massive problems and lead to the end of all that is beautiful and innovative, as they claim about broadband. Instead, they're basically admitting that they helped out with and profited from this scam for years, and that the FCC needed to make use of this authority to protect the consumers that AT&T did nothing to protect, despite knowing full well what was going on for many, many years.

So, from all this, we sense two things: (1) these big telcos can be nasty scammers, cheating people out of money even when there is competition and (2) Title II is not so horrible after all and can actually be quite helpful (eventually!) in getting the big telcos to eventually stop their scammy practices and pay up...

Filed Under: competition, cramming, fcc, ftc, net neutrality, regulation, scams, title ii
Companies: at&t

11 Comments

FTC Cracks Down On T-Mobile For Massive Bogus Charges And Fee Scam

Scams

from the whoops dept

Tue, Jul 1st 2014 8:33pm — Mike Masnick

So you know all that stuff about how T-Mobile has been trying to position itself as the "uncarrier" that actually treats customers right instead of bilking them at every opportunity? Yeah, that would be a lot more convincing if the FTC didn't just come down on the company for bilking millions in bogus charges from people. It appears that T-Mobile was engaged in a form of cramming that signed subscribers up to $9.99/month "subscriptions" to content they'd never asked for:

In a complaint filed today, the Federal Trade Commission is charging mobile phone service provider T-Mobile USA, Inc., with making hundreds of millions of dollars by placing charges on mobile phone bills for purported “premium” SMS subscriptions that, in many cases, were bogus charges that were never authorized by its customers.

The FTC alleges that T-Mobile received anywhere from 35 to 40 percent of the total amount charged to consumers for subscriptions for content such as flirting tips, horoscope information or celebrity gossip that typically cost $9.99 per month. According to the FTC’s complaint, T-Mobile in some cases continued to bill its customers for these services offered by scammers years after becoming aware of signs that the charges were fraudulent.

Not only were the frequent complaints and cancellations of the service a clear sign that T-Mobile should have known these charges were fraudulent, but T-Mobile seemed to go out of its way to disguise the nature of these charges to try to minimize the complaints:

The complaint against T-Mobile alleges that the company’s billing practices made it difficult for consumers to detect that they were being charged, much less by whom. When consumers viewed a summary of their T-Mobile bill online, according to the complaint, it did not show consumers that they were being charged by a third party, or that the charge was part of a recurring subscription. The heading under which the charges would be listed, “Premium Services,” could only be seen after clicking on a separate heading called “Use Charges.” Even after clicking, though, consumers still could not see the individual charges.

The complaint also alleges that T-Mobile’s full phone bills, which can be longer than 50 pages, made it nearly impossible for consumers to find and understand third-party subscription charges. After looking past a “Summary” section as well as an “Account Service Detail” section, both of which described “Usage Charges” but did not itemize those charges, a consumer might then reach the section labeled “Premium Services,” where the crammed items would be listed.

According to the complaint, the information would be listed there in an abbreviated form, such as “8888906150BrnStorm23918,” that did not explain that the charge was for a recurring third-party subscription supposedly authorized by the consumer. In addition, the complaint notes that consumers who use pre-paid calling plans do not receive monthly bills, and as a result the subscription fee was debited from their pre-paid account without their knowledge.

Here's the example the FTC provided showing how T-Mobile hid these bogus charges:

By the way, nice touch by the FTC to use T-Mobile's trademarked magenta color in making that graphic!

And, of course, the story gets worse. Even if people figured out what the hell was going on, and finally got someone on the phone at T-Mobile customer service to sort it out, the company often failed to provide them with full refunds.

When consumers were able to determine they were being charged for services they hadn’t ordered, the complaint alleges that T-Mobile in many cases failed to provide consumers with full refunds. Indeed, the FTC charged that T-Mobile refused refunds to some customers, offering only partial refunds of two months’ worth of the charges to others, and in other cases instructed consumers to seek refunds directly from the scammers – without providing accurate contact information to do so.

The complaint also notes that in some cases, T-Mobile claimed that consumers had authorized the charges despite having no proof of consumers doing so.

T-Mobile has done a bunch of consumer friendly things in the recent past, but these sort of practices suggest that the traditional soul of phone companies, always looking to squeeze extra fees out of users is alive and well within the company.

Filed Under: consumers, cramming, fee scams, ftc, hidden charges
Companies: t-mobile

Jawa Threatens Blog That Accused It Of Cramming, Gets Blog Taken Down By ISP

Defamation

from the intimidation dept

Tue, Mar 29th 2011 7:35am — Mike Masnick

The JAWA story continues. Yesterday, we posted about accusations from Verizon Wireless that JAWA was effectively "cramming" premium SMS charges onto users' bills, which came about following an investigation (and eventual lawsuit) by Texas regulators. The blog AZDisruptors.com has been highlighting some of the accusations against JAWA while most of the press had kept quiet on it. However, it appears the folks at JAWA don't like that. They sent a cease-and-desist to the operator of the blog (embedded below), Hamid Shojaee, that makes all sorts of accusations against him; claiming defamation, false light invasion of privacy, tortious interference with business relations and criminal harassment.

The letter also, oddly, accuses Shojaee of being a cyebersquatter, despite that having nothing whatsoever to do with what's being disputed here, and Shojaee clearly explains why he has the various domains he has. As for the specific legal threats against Shojaee, it's hard to see how the latter claims have any merit. The defamation claim is the key one, but considering that both the Texas attorney general and Verizon Wireless's lawsuits against JAWA seem to make similar claims, it's difficult to see the defamation claim standing. On top of that, since JAWA's CEO Jason Hope is clearly a public figure, the standard for defamation is much higher and, almost certainly, was not met by Shojaee. I'm guessing that JAWA wouldn't even want to get into the discovery phase of any such lawsuit -- meaning this threat letter feels a lot like a SLAPP. Arizona has an anti-SLAPP law... but it is very limited and almost certainly doesn't apply here, unfortunately (all the more reason for a federal anti-SLAPP law).

Separately, JAWA's lawyers contacted AZDisruptors.com's host, SquareSpace, and registrar, GoDaddy, demanding the site be taken down for these reasons. Ridiculously, SquareSpace complied -- without even contacting Shojaee first. This is problematic for a variety of reasons. First of all, SquareSpace has no legal requirement to takedown a site upon accusations of defamation. Section 230 protects it against liability in those circumstances. But, even more to the point, the fact that it would take down the site without first even hearing from Shojaee is really problematic and suggests that SquareSpace should not be trusted as a hosting provider.

Either way, Shojaee is fighting back. He got SquareSpace to put the site back up and has responded to JAWA's accusations against him with a lawyer, who seems well equipped to respond to such bullying. I've embedded the response letter below, but just a snippet:

Your letter, its accusations, and its conclusions are shocking. And you are wrong in every respect...

[...]

I can't close a letter without pointing out the obvious: your letter, instead of addressing Mr. Shojaee's accurate claims about Mr. Hope's business activities, maligns his character and accuses Mr. Shojaee of "fail[ing] to disclose your true motives to your readers." You then go on to list a number of web domains that Mr. Shojaee legally owns in connection with a legitimate business purpose.

The idea that Mr. Shojaee has done anything to apologize for is laughable. It is Mr. Hope who has built a company based on deception; it is Mr. Hope who has illegally used technology to bilk consumers out of millions; it is Mr. Hope who has chosen to interfere with my client's business...

Sounds like the attempt at intimidation isn't likely to work... Oh, and in the meantime, the press is starting to pick up on the story as well.

Filed Under: arizona, cramming, defamation, free speech, hamid shojaee, jason hope, slapp, takedown
Companies: jawa

What Does It Take For Mobile Operators To Care About SMS Cramming Scams?

Scams

from the scams-pay? dept

Mon, Mar 28th 2011 3:52pm — Mike Masnick

The various mobile operators have been making tons of revenue off of premium "short code" SMS programs. These are ways to add charges for various things directly to your phone bill. For example, they've become popular with various charities, so you can support them simply by texting a message to a particular short code. Of course, in many cases, the mobile operators charge you or take a cut for allowing this. And, of course, as with anything like this, it's been left open to scammers... and those scammers have moved in. Just as we saw with phone service cramming, where charges would be added to your landline phone bill, there's been a growing set of operations cramming premium SMS offerings.

Broadband Reports highlights the saga of JAWA, a Scottsdale, Arizona-based company that's at the center of allegations of cramming. The company and a bunch of shells allegedly send text messages to people that say:

"Text back STOP if you don't want to subscribe."

Most people, of course, don't text back because they think it's a scam. What they don't realize is that even if it's a scam, it's the not replying that lets the telcos start adding fees to your bill. The big question here: why does any mobile operator allow charges to be put on your phone bill for inaction?

The blog AZDisruptors (normally about Arizona startups) has been calling attention to the company, including putting together this video explaining how the cramming works, how JAWA's CEO Jason Hope is apparently building the largest house in the US (complete with a 3-story night club), and how AT&T pretends (falsely) that it can't do anything about it: Oh yeah, Broadband Reports also notes that Hope's former blog, which was all about the Lamborghinis and other luxury cars he was acquiring, has suddenly changed to point to a page about his philanthropic work.

The thing is, JAWA has been doing its thing for quite some time. After Texas regulators began investigating, Verizon Wireless finally realized it needed to do something and sued. Amusingly, JAWA's defense to the lawsuit appears to be that it employs lots of people and is good for Scottsdale. However, it also points out that it's made Verizon Wireless tons of money, and even complains that Verizon Wireless seems to be withholding money owed.

While it's nice that Verizon Wireless has filed suit, it appears this only happened after Texas regulators began investigating, and after they made money from JAWA for a period of nearly four years. AT&T now claims that it's investigating too, but only after AZDisruptors demonstrated company representatives blatantly lying to him about whether or not they make any money from this and whether or not they can stop it.

The big question in all of this really should be why the mobile operators allowed this to happen at all. Why would they ever allow charges to be added to an account as a result of inaction, rather than through direct acceptance?

Filed Under: cramming, mobile operators, scams
Companies: at&t, jawa, verizon wireless

43 Comments

Cramming Scammers Apparently Spent All Their Money -- Paying Back 5% Of The Money Taken

Scams

from the that's-all-they-can-afford dept

Mon, Aug 20th 2007 6:52am — Mike Masnick

We haven't heard much about cramming scams lately, but they still happen all the time. For those who don't know, cramming is when a third party company either illegally gets additional charges on your telephone bill or (more often) tricks you into agreeing to more charges on your phone bill. Four years ago, we wrote about some of the tricks used in cramming call centers, where they pretend they're just "verifying" information -- and then bundle a whole bunch of questions together, tricking people into saying yes to all of the questions, when they really mean to say yes to the last question. The companies later use those recordings (sometimes edited) to prove to people that they "approved" the charges and refuse to cancel the charges or refund the money. Various state governments and the FTC have tried cracking down on these companies for a while, and the FTC went after a bunch last summer -- which has resulted in a settlement. Unfortunately, while the companies took people for $24.7 million, they're only paying back $1.2 million (and not admitting any guilt). Apparently, the firms claim that the $1.2 million is all they can afford. Apparently lesson one if you're going to scam a bunch of people is to spend all that money before the authorities catch up with you.

Filed Under: cramming
Companies: ftc

21 Comments

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AT&T Fined For Turning A Blind Eye As Drug Dealers Ripped Off Its Customers

from the telecom-free-for-all dept

After A Ten Year Nap The Government Wakes Up On Cramming, Finally Holds Big Carriers Accountable (Sort Of)

from the better-late-than-never dept

FCC Used Title II To Fine AT&T For SMS Cramming And The World Didn't End: Why Would It For Broadband?

from the questions-to-ponder dept

FTC Cracks Down On T-Mobile For Massive Bogus Charges And Fee Scam

from the whoops dept

Jawa Threatens Blog That Accused It Of Cramming, Gets Blog Taken Down By ISP

from the intimidation dept

What Does It Take For Mobile Operators To Care About SMS Cramming Scams?

from the scams-pay? dept

Cramming Scammers Apparently Spent All Their Money -- Paying Back 5% Of The Money Taken

from the that's-all-they-can-afford dept

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